Search results

The purpose of this paper is to examine the substitute between social old-age insurance and adult children in providing old-age support, and estimate the effects of China’s old rural pension program (ORPP) on sex ratio.

Using data from China’s 2005 inter-census population survey and China Health and Retirement Longitudinal Study, this paper estimates the effects of children on rural parents’ take-up of pension program and the effects of having access to pension on old parents’ choice of resource for future old-age support. The effects of China’s ORPP on sex ratio are estimated using difference-in-differences identification strategy.

Peasants having sons are less likely to participate in pension program and each additional son and daughter significantly decreases their likelihood of participation. Moreover, the effect of sons is much larger than that of daughters. Peasants having access to pension are less likely to rely on their children for old-age support. The implementation of the ORPP moderately decreased sex ratio.

Implementing pension program in China’s rural area will probably affect rural people’s fertility behavior and thus be helpful in correcting sex ratio bias.

This paper first estimates the effects of having access to pension on old parents’ choices of providers of old-age support, and estimates the causal effect of rural pension on sex ratio using standard DID strategy.

China’s new rural pension program (NRPP), a fully funded defined contribution plan among the rural residents with heavy government subsidy toward contributions, has expanded rapidly since its introduction in 2009, and is expected to achieve universal coverage by the end of 2012. Empirical evidence, however, shows that although those close to pension eligibility age are enthusiastic, take-up rate is low among younger people, and participants tend to choose plans with the least contribution requirements, threatening the long-term viability of the program. We calculate the net benefits of participation on behalf of rural residents and demonstrate that poor designs are responsible for these problems. A proper rate of return on individual investment is not only essential for encouraging participation and ensuring a higher replacement rate but will also require less government subsidy and relieve fiscal burdens on the government.

The economic reform started in 1978 progressively pushed China into one of the largest market-oriented economies in the world. The reform also triggered substantial transformations in the labor market. The labor surplus generated by increased productivity in rural areas, together with the growth in labor demand driven by export-oriented sectors in urban areas, contributed to the largest movement of workforce in history. The rural-to-urban migration currently taking place is substantially contributing to the sustained economic growth of China – especially of its cities – but also raises important issues about segregation and inequality in the urban labor market. In contrast, migration has also significant consequences for the individuals left-behind in rural areas. How economic conditions in sending households and villages are affected by the remittances sent by migrants, or by their return from the cities, is crucial for assessing the benefits of migration. The gradual decline of state-owned companies and the rise of the private sector emphasize on the one hand the consequences that labor reallocation has on the occupational mobility of the workforce and on the other the crucial role that entrepreneurship will have in the future development of China. Pulled by economic growth, investments in education have substantially increased especially in urban areas, posing challenges on how skills can be efficiently allocated in the labor market. In the background, reforms of the welfare system have slowly started to take place. One clear challenge is how the social insurance and pensions system can be transformed into one that is more compatible with a market economy. Another issue will soon be its sustainability, considering the imminent shrinking of the labor force caused – among other things – by the one-child policy.

Consumption volatility is a key source of economic growth volatility; thus, it is an important factor in designing macroeconomic policy. The purpose of this paper is to investigate the factors that determine household consumption volatility, using urban household survey (UHS) data over the period 2002–2009 in 18 provinces in China.

Both a traditional variance decomposition method and an advanced variance decomposition method are used.

The traditional variance decomposition method suggests that heterogeneity of consumption goods is the key to analyze consumption volatility in China. Consumption of transportation makes the highest aggregate contribution and per-unit volatility in consumption volatility, whereas consumption of food makes the second highest aggregate contribution and the lowest per-unit volatility. Further investigation with the advanced variance decomposition method, which allows the authors to capture intertemporal dynamics and cross-household differences simultaneously, finds that the main factor determining the consumption volatility in China is intertemporal dynamics, rather than cross-household differences.

Future research could fruitfully explore four issues. First, consumption upgrading has increased the volatility of China’s household consumption. How much will this affect economic growth in China under its “new normal” conditions, and how should the Chinese government respond? Second, differences between UHS data and aggregate data in the calculations of consumption risk sharing need to be investigated. Third, it is important to investigate the channels through which the Chinese government can enhance its ability to spread consumption risks and thus reduce consumer consumption volatility. Finally, further study could extend the current 18 provinces to a nation-wide sample and update the data beyond 2009 to estimate the impact of the global financial crisis.

The results suggest that when policy makers design macroeconomic policies to smooth consumption volatility, they should consider heterogeneity in household consumption goods, regional disparity and intertemporal dynamics simultaneously. Well-managed volatility of Chinese household consumption can contribute to a stable economic growth in China and the world.

Well-managed volatility of Chinese household consumption can contribute to a stable economic growth in China and the world.

This paper fills this gap by using China’s UHS data to assess consumption volatility from the perspectives of heterogeneity in household consumption goods, cross-household differences and intertemporal dynamics. We make three contributions to the literature. The first contribution of this paper consists of demonstrating the contributions of heterogeneity in household consumption goods to consumption volatility. The second contribution consists of using the advanced variance decomposition method proposed by Crucini and Telmer (2012). This decomposition methodology allows the authors to examine whether household consumption volatility is due to cross-household differences or intertemporal dynamics. The third contribution is that this paper takes Chinese residents’ consumption fluctuations as the starting point to analyze the impact of consumption fluctuations on the future trend of China’s economy.